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IT Spending: How Do You Stack Up?

8.0 IT Spending:

How Do You Stack Up?

A

t one time or another, virtually every IT manager has to look at IT spending. In many IS

organizations, this self-evaluation must be done annually.

Many consider IT spending levels a proxy for IS organizational efficiency. Although IS efficiency

relates to IT spending levels, an IS organization’s level of spending alone does not determine

efficiency.

Evaluating IT spending levels — within the enterprise and with external peers — represents a

valuable exercise. Asset managers often are at the forefront of such discussions.

However, many IT managers misuse the IT spending data they gather. An IT spending peer

benchmark can give an IS organization a false sense of security. For example, an enterprise

whose IT spending sits at the industry average still may not manage its IT resources well.

Enterprises need to recognize that IT spending metrics can be misleading, and may provide a

false sense of security to enterprises.

Asset managers must consider issues beyond overall IT spending levels, such as:

• How much of the IT budget is discretionary vs. nondiscretionary

• How much it costs per employee to deliver IT services

• How will cost components within the IT budget change over time

This chapter presents high-level IT spending benchmarks and other metrics designed to help

enterprises compare themselves to peers. Asset managers should recognize that:

• The cost-consciousness of 2002 is here to stay

• They can assume a critical role in helping the enterprise meet its cost-saving objectives

This chapter also gives asset and procurement managers a broad context for IT spending. Although

some people may not be responsible for the metrics discussed here, they still have to operate

within them in their enterprises. The more the asset and procurement management team knows

about overall IT spending trends, the more likely it can align its processes with the overall IT and...